Oil prices rise as geopolitical risk rises rapidly

Oil prices rose dramatically on Monday morning, with Brent topping $81 and WTI rising to $77.

While the hope of an interest rate cut had already fueled bullish sentiment in markets, geopolitics and supply risks pushed prices higher on Monday morning.

A combination of Israel launching attacks against Hezbollah in Lebanon, Russia launching a major missile and drone attack on Ukraine, and the Libyan government in Benghazi declaring force majeure on all oil facilities has sent oil prices soaring.

All three of these events develop storylines, but here’s what we know so far:

Israel and Hezbollah exchange fire in major intensity

Early Sunday morning, Israel launched what it claims was a preemptive strike against Hezbollah in southern Lebanon. The exchange of fire between the two sides was the biggest since they fought a 34-day war in 2006.

Shortly before 5 a.m. local time, Israel launched 100 jets to target 40 locations in Lebanon that it claimed were preparing to fire missiles and rockets into Israel.

Hezbollah then claimed to have fired more than 340 rockets at 11 military targets in Israel and the Golan Heights.

These attacks are likely to undermine the ongoing ceasefire talks in Egypt.

Russia targets Ukrainian energy infrastructure in massive missile and drone strike

On Sunday night and early Monday morning, Russia launched a coordinated missile and drone attack on cities and critical infrastructure in Ukraine.

President Zelensky claimed that more than 100 missiles and around 100 attack drones were launched by Russia overnight.

Russia says it aims to hit critical infrastructure in the country, managing to cause power outages and disruptions to water supplies.

Explosions were reported in Kiev and other Ukrainian cities.

Libya’s eastern government will halt oil production and exports

On Monday morning, the Libyan government in Benghazi said the country’s oil fields were shutting down and all production and exports would stop.

Although the government is not recognized internationally, it controls most of the country’s oil fields.

Tensions have risen in Libya in recent weeks, with attempts to oust the head of Libya’s Central Bank leading to the mobilization of armed factions on both sides.

The combination of these three events only added to the bullish sentiment and will likely make for another volatile week for oil prices as these stories develop.

By Josh Owens for Oilprice.com

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